Business transformation: From crisis response to radical changes that will create tomorrow’s business

STRATEGY AND TRANSFORMATION Business transformation: From crisis response to radical changes that will create tomorrow’s business A Capgemini Consulting survey About the survey The survey was carried out by TNS Sofres in June 2009, and comprised 302 top executives from companies employing over 10,000 employees from all sectors of activity. Countries covered by the survey: the United Kingdom (81 interviews), Germany (61 interviews), the Netherlands (80 interviews) and France (80 interviews). 2 Trends in Business Transformation 2009 It is imperative for businesses to be on the move. The changing world drives them to transform; it’s simply a question of survival. How do top managers view this challenge? What are their views on the experience of conducting major transformation programs? What kind of programs do they undertake, and with what results? This survey seeks to answer those, and other, critical questions. A comparison with the results obtained for this same survey in 2006 -- Capgemini Consulting/The Economist Intelligence Unit Survey of The Trends in Business Transformation -- is enlightening. It shows in particular that managers have now reached a high level of maturity in the art of transformation. This survey also highlights those radical changes – even deeper than the effects of the current economic crisis – that will trigger the transformations of tomorrow. Trends in Business Transformation 2009 3 Contents Business transformation in a changing world Business transformation: now the norm 7 Business transformation: reorganization is key in times of crisis 8 A key issue at the heart of the transformation: the human aspect 9 Overall transformation management: “Could do better” 10 Deciphering a changing world what changes form the basis of tomorrow’s transformations? Sustainable Development 13 Global economic shifts and rebalancing 14 Rise in ethical concerns 15 New distribution of power and value 16 Economics of the intangible 17 Urban concentration 18 Emergence of a neo-modern citizen 19 Trends in Business Transformation 2009 5 The business transformation in a changing world Business transformation: now the norm Transforming the business is a key management process will inevitably see major and regular upheavals in their that is now an everyday practice. In other words, companies, such as changes in management systems, managing a business now equates to transforming it. scope of activities, type of business functions and even shareholding. For 82% of European managers, transforming the organization has become of vital importance in business. Although the survey highlights that the economic crisis In France, managers are almost unanimous in this regard, has accelerated and built awareness of business with 94% saying that these transformations are an integral transformation, the “volume” of transformations is stable part of their daily existence. Further data backs this up. for almost one out of two managers. However, the crisis The companies interviewed stated that they launched, has affected the nature of the transformations undertaken on average, one transformation project every six months. far more than the number. This is a marked change, All told, the results show that today’s senior executives expressed by 68% of the managers interviewed. Figure 1 - Business transformation has become Figure 3 - The current economic crisis has made us… a central way of working Change the kind of business transformations we are making? +FR 94% 18% 82% 29% 68% Agree Disagree Increase the number of business transformations? Figure 2 - Approximately, how many business 46% 51% transformation projects has your organization undertaken in the past three years, in total? Yes No 0 to 1 2 to 4 5 to 7 8 to 10 > 10 9% 35% 18% 5% 34% Less than 5 projects 5 projects and more 44% 56% Trends in Business Transformation 2009 7 Business transformation: reorganization is key in times of crisis Three types of transformation have gained ground in In times of crisis, it is clear that businesses favor the last three years (up by 15% on average, in each case, quick-win initiatives that are focused on competitiveness compared with the results of the 2006 survey). and efficiency rather than longer-term market growth. Companies are investing massively in drastic cost-cutting It should be noted that France differs from its European of all kinds: organizational restructuring (62%), cross- neighbors due to its higher number of mergers and functional performance improvements (56%) and acquisitions (76% of managers identified these as a value-chain optimization (51%). company project within the last three years), and a lower number of value-chain optimization projects (39% versus Although other types of transformation continue to be the 51% average): French businesses rely on external used frequently, their use remains stable. This includes changes rather than on optimizing their internal such initiatives as strategic change (eg, a change of busi- organizations… ness model), mergers and acquisitions, or more isolated projects such as outsourcing, relocation or IT projects. Figure 4 - Which of following types of business transformation projects has your organization undertaken in the past three years? Reminder In % 2006 Enterprise-wide organizational restructuring 62 46 Corporate transactions +FR 76% 57 57 (eg, M&A, divestitures) -NL 43% Outsourcing - Offshoring 53 56 Cross-functional performance improvement program 56 44 Enterprise-wide IT project 52 54 Value-Chain optimization +GER 64% (eg, major supply chain project) 51 34 -FR 39% Strategic change (eg, change of 44 46 -GER 28% business model) Other 2 8 Trends in Business Transformation 2009 A key issue at the heart of the transformation: the human aspect A significant majority (more than three-quarters) of degree of ambition required, and bringing the teams into company managers are confident that their businesses the transformation process, are profound challenges that have the capability to define a target (degree of ambition, respondents feel insufficiently prepared for. The main results expected) and to structure the resulting points of friction are mastering the operational aspects transformation program.